14 DAY TRIAL // iPhone revenue is down 15 percent in the first quarter of 2019 as compared to the same period a year ago, and Apple CEO Tim Cook finally admits that the high price of the new generation is one of the factors that generated the decline.
Speaking with analysts after the earnings call, Cook explained that Apple hasn’t actually increased the pricing of the iPhone when the 2018 lineup was introduced, but instead tried to go for an approach that made sense given the upgrades.
Cook noted that the iPhone XS was priced the same as the iPhone X, whereas the XS Max was only $100 more expensive, which was a natural increase given the bigger screen.
The iPhone XR, which was the cheapest iPhone launched last year, was supposed to be placed just between the iPhone XS and the iPhone 8 Plus, as the latter continues to be available for purchase.
Addressing the pricing issue
Apple’s CEO says iPhone sales declined mostly in international markets, as this pricing strategy didn’t produce any significant changes in terms of US sales.
“We priced the iPhone XS in the U.S. the same as we’d priced the iPhone X a year ago. The iPhone XS Max, which was new, was a hundred dollars more than the XS, and then we priced the XR right in the middle of where the entry iPhone 8 and entry iPhone 8 Plus had been priced. So it’s actually a pretty small difference in the United States compared to last year,” he said.
Tim Cook went on to highlight other potential reasons for the iPhone sales decline, explaining that the lack of subsidized devices forced many to hold onto their purchases.
“If you’re a customer that your last purchase was a 6S or a 6 or in some cases even a 7, you may have paid 199 dollars for it, and now the unbundled world it’s obviously much more than that,” he said.
Apple’s CEO concluded that the company is trying to resolve the pricing issue on the new iPhones, and one of the methods to do this could be increasing the value of trade-ins.
“Yes, I do think the price is a factor. And so we are working through those and we’ve got a number of actions to address that, including the trade-in and the installment payments, which I had mentioned as well,” Cook said.